Building vs. buying your engineering staff

Should I build it or buy it? It’s an age old question often used in reference to furniture, websites and risky home remodeling projects (DIY is fun, I swear!). Same goes for your engineering team — should I hire and build out an engineering staff or should I outsource an engineering team?

According to a 2016 study done by Deloitte, 72% of organizations with over $1 billion in revenue are outsourcing their IT functions. However, only 31% of them plan to increase this spending in the following year. Could this allude to investments for inhouse staff? Maybe. In the following paragraphs, we will discuss the pros and cons of creating an inhouse vs. outsourcing engineering staff.

Building vs. buying engineering — two methods

Let’s start with some simple definitions.

Building an engineering team: We’re talking about hiring people. When I say building, I mean recruiting talent, hiring them full time, offering benefits and keeping them engaged with exciting projects. I also mean hiring experts in the field who are lifelong learners and are excited about innovation. In time, they give back to the company through their developed expertise, loyalty and institutional knowledge. Those are your people.

Buying an engineering team: This one is ever-so-slightly more complicated. Buying an engineering team can manifest in several different ways. You could hire temporary contractors, outsource overseas, hire an agency or firm or simply go full rent-a-data-center style and have a completely public cloud. Either way, you are paying to play.

The pros and cons of building an engineering team inhouse

Pros:

The underlying priority behind building your engineering team inhouse is innovation — this is especially true of medium-to-large size organizations focused on rapid growth and scalability.

Collaborative innovation

Although every employee has different preferred working styles, it’s hard to argue that even the most introverted of producers like to throw an idea off of somebody else to get some feedback or context. And in the best case scenario, collaboration can encourage team brainstorming, feedback and optimization of an idea. In an Inc.com article citing several quotes from industry leaders, face-to-face time (even when remote) is key for driving innovation. Other tips include bringing ideas to meetings and doing scheduled code reviews — all things that work best with a salaried team that knows your business through and through from direct experience.

Fast issue remediation

If an issue comes up in your data center, your business’ reputation and financial growth depend on getting it fixed. In fact, you or your managers are probably counting the lost dollars every second the issue persists.

When you outsource your IT team, you’re depending on a vendor to a) be available to fix it, and b) prioritize your company over all others. If your engineering team is in house, and if you have the proper processes in place (allow me to shamelessly plug automating your operations with NetQ), then you’ll be able to rely on a quick response from someone who not only knows your business infrastructure, but also likely even helped build some of it (or works side by side with the people who did). There is also a sense of pride and ownership from your in-house engineering team. They built the infrastructure, so it would naturally infer that their reputation is inherently ingrained with the success of the infrastructure.

Company culture focused on innovation

A company’s culture is what makes them tick — it’s what they focus on, and it’s what drives the business’ growth. Many companies focus on being “customer-centric” or “employee first.” And many, especially in technology, focus on innovation. There are many theories about how to develop an innovative culture, from creating the right organizational structure to offering meaningful incentives to provide free time for ideation. If you’re in the technology space, or in an organization that is focused on innovating in the tech space, then the organization’s employees are focused on that IT team. They are waiting for the next product development or enhancement and all eyes are on engineering to make it happen. Now ask yourself this: would you rather have the symbol of your business development be overseas or in the center of your office?

Organizational alignment

Similarly, depending on the size and focus of your organization, you’ll have a sales, marketing, product marketing, HR and/or product marketing department. These departments are probably communicating about your products and technological enhancements in some sense, and they need technical resources in order to talk about the products or services accurately. With an inhouse IT team, you can encourage inter-department collaboration to ensure all departments are working with IT closely to cultivate an accurate and engaging message. With an in-house team, the members can build relationships across organizations and leverage them to accomplish tasks more efficiently.

Hiring the talent you need

Possibly the most critical benefit of hiring in house is being able to recruit the talent you need to drive your business and train the talent you have to refine your business. Rather than purchasing a pre-packaged group of various engineering talents, you can focus on the specific roles, talents and expertise to develop your products the way you want to. You can focus on hiring premium engineering talent to drive innovation, and you can train them on specific technologies as needed to fit your business.

Cons:

The cons come down to upkeep. Hiring inhouse means you’re dealing with lots of actual people, and people can be demanding.

Recruiting top talent can be costly

The flip side to the above pros is that recruiting can be difficult and time consuming. Your HR team may be bogged down with finding the right person for the job, and the specialities you need may be competitive — meaning convincing them that your business is the place to be can be expensive. Recruiting doesn’t have to be difficult, but it can be.

Retaining top talent can be costlier

Similarly, retaining talent can be equally difficult and expensive. Now that you have an inhouse team, you need to keep track of salaries, benefits, PTO, incentives, promotions, training, etc. Although these systems are likely already in place at your organization, building an IT staff inhouse will definitely add to the strain of management of these types of logistics. If you’re going to hire in-house, be sure your HR and your managers are ready for it.

Staying relevant requires a commitment to training

One perk of buying an IT staff, discussed in greater length below, is that if you’re not happy with the skills or relevance of your vendor, you can simply end the relationship when contractually appropriate. With an inhouse team, you should instead focus on training and improving your staff as industry trends and technology change. This will help keep your business innovative and your staff motivated. Of course, the downside is that this is a resource commitment.

The pros and cons of buying an engineering team

Pros:

The biggest benefit to hiring a vendor comes down to ease. All the cons of hiring inhouse disintegrate with this option.

Managing a static budget

Unlike a budget for employees, which is in flux with turnover and promotion, using a vendor means you’ll likely negotiate one price or retainer and stick to it, barring any issues (see cons below). It’s an easy credit/debit from your regular IT budget.

No people manager required

Another major benefit is the ease of management. With inhouse employees, you have to consider who can manage, mentor and coach them. With a vendor, you’re not responsible for any of that. All you have to do (or at least really should do) is appoint one or a few inhouse employees to be a point of contact with the vendor. No fluffy people management required.

Plus, you won’t have to worry about training, recruiting or finding the right talent for the job. All you have to do is find a vendor that fits the bill and promises to shape shift. This is the biggest benefit by far for many.

No/low commitment

Finally, hiring a vendor doesn’t require the commitment or training of an employee. Most vendors are contractually bound to a finite time frame, and you’re not responsible for training or improving them. If the vendor stops maintaining relevance in the industry, you can simply find another.

Cons:

Like in most things, prioritizing simplicity means sacrificing innovation.

Blowing your budget when calamity calls

When we discussed hiring inhouse, one of the key benefits was quick remediation. So let’s play this scenario out with a vendor: pretend there’s a network outage or you need to turn around a new application quickly to meet a deadline. The key here is that time is against you. Many times, your vendor may have a capped retainer, hours or support. That means that you’re not only possibly waiting longer for remediation, but you’re also paying for it — and maybe even with a tax.

Product familiarity and expertise

Another major sacrifice for simplicity is product knowledge. An inhouse team, over time, will know your product in and out as seniority increases. Even if you stick with a vendor for years, they are unfamiliar with the nuances of how your company ticks and how your processes pan out. It’s very unlikely your vendor will ever have the same product knowledge as inhouse engineering, which means they won’t be able to improve it at the same rate either.

Personal investment

A hired engineering team works for the vendor you’ve chosen, not you. So their priorities aren’t exactly aligned with your business goals. If you want a team that’s hyper-focused on improving your business, you’re not going to get that with a vendor.